Rising fuel prices push up United Kingdom inflation for first time in 2018

Retail inflation fell to 9-month low of 4.17 per cent in July on declining vegetable prices which may prompt the Reserve Bank to pause interest rate hike in its next monetary policy review. With this decline, and a higher industrial production growth rate in June, the chance of another policy rate hike in October has faded.

The inflation in pulses saw a negative inflation of (-) 8.91 per cent as compared to the same month past year.

Based on Consumer Price Index (CPI), inflation for June has also been revised downwards to 4.92 percent from the earlier estimate of 5 percent, as per the Central Statistics Office (CSO) data released on Monday.

As measured by the Consumer Price Index, it stood at 1.6% in July, down from 2.6% the previous month.

Despite the rise for CPI, wage growth is still outstripping inflation.

The latest fare rises are slightly lower than the 3.5 per cent that had been feared - but will still cause fury among commuters suffering with poor services and widespread strikes.

The latest inflation figures come just 24 hours after the ONS showed that unemployment in the United Kingdom has fallen to just 4%, a low not witnessed since the early 1970s. "Despite the truckers' strike, food inflation eased considerably in July 2018, benefiting from the base effect", she said. However for eggs, cereals and products as also oil and fats the rate of price rise was higher than in June.

"These figures show that the cost of living squeeze is not yet a thing of the past", Tej Parikh, a senior economist at business lobbyist the Institute of Directors said in an email.

High YoY fuel price increases have led to continuous increase in inflation of the fuel and light, and the transport and communication groups. A Reuters poll of economists had predicted the inflation to come at 4.51 per cent. "Crude oil prices continue to display a volatile trend, driven by geopolitical risks and concerns regarding supply as well as demand in various parts of the world", Ms Nayar added.

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